S&P cuts U.S. TelePacific

S&P said it cut U.S. TelePacific Holdings Corp.’s (TPx Communications) ratings a notch, including issuer rating to CCC+ from B.

“The downgrade reflects our view that the company's liquidity will be pressured over the next 12 to 18 months, absent additional equity infusions from its parent Siris. As of June 30, 2021, the company had about $37 million of cash and equivalents, full availability under its $25 million revolving credit facility, and $60 million available under its equipment receivables facility. Its current liquidity follows a $25 million equity infusion from the parent company Siris Capital,” the agency said in a press release.

The agency noted the equipment-receivables facility is used to fund the sale of equipment to the company's customers base on an installment basis, which pressures working capital.

“Underperformance and one time transformation and merger costs have contributed to elevated S&P Global Ratings-adjusted debt to EBITDA, which we expect will be in the 11x-13x area in 2021,” S&P said.

The outlook is negative.

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